DEPRESSION ERA DNA

This was the world confronting the Littleton staff when they set out to pioneer another way of doing economic development. Being unrestrained from economic development orthodoxy gave the staff the freedom to question basic assumptions, and then to innovate a number of new tools and concepts.

FOUNDATIONAL IDEAS

The introduction of an entrepreneurial approach to economic development was a significant milestone, but the true impact of Economic Gardening came from a series of innovations in principles, tools, and techniques to implement that idea. There was an explosion of new economic ideas in the 1990s, and the Littleton staff integrated these cutting-edge ideas and tools into a dramatic new approach. None of these were topics in academic journals or economic development conferences in 1987.

The introduction of an entrepreneurial approach to economic development was a significant milestone, but the true impact of Economic Gardening came from a series of innovations in principles, tools, and techniques to implement that idea. There was an explosion of new economic ideas in the 1990s, and the Littleton staff integrated these cutting-edge ideas and tools into a dramatic new approach. None of these were topics in academic journals or economic development conferences in 1987.

MILESTONES

The Groundbreaking Research

• David Birch at MIT was the first to recognize that small businesses were producing a significant percentage of the new jobs. Later he homed in on gazelles, the fast growing, scaling companies creating the good paying jobs. At the same time, the National Establishment Time Series data showed that 80-90% of all jobs were created by local companies.

• Phil Burgess at the Center for the New West promoted the idea that communities should spend less resources on recruiting businesses (economic hunting) and more on nurturing of local growth companies. Burgess called it economic gardening.

• Paul Romer at Stanford proposed the idea that economic growth is a function of new knowledge, not just more capital/labor. Romer won a Nobel Prize for his work.

• Katharine Briggs and Isabel Briggs Myers work in temperament identified personality patterns in the CEOs of growth companies.

• Donella Meadows at MIT simplified systems thinking to isolate the supply/demand ratio as the key leverage point in improving economies.

• Albert-Laszlo Barabasi at Notre Dame demonstrated that networks tended to concentrate around a few “influencers.”

• The Santa Fe Institute, staffed by the scientists from the Los Alamos National Lab, developed the new science of complex adaptive systems that contended economies worked at the edge of chaos and were prone to collapse.

Sophisticated Tools

• Commercial database subscriptions for market research,

• Geographic Information System maps of potential markets,

• Search engine optimization to improve Google rankings,

• Listening posts to monitor consumer chatter and buying signals, and

• Watering holes to identify gathering places which discuss products and services.

The Littleton staff found that smaller growth companies could not afford these tools, and often didn’t even know they existed. They needed the information, however, just as much as the large enterprises and for the same reasons. The basic elements of business were the same, regardless of size.

New Principles

Commoditization is the root cause of poverty. The Littleton staff argued that commoditization meant that a company’s products and services could not be differentiated from its competitors, so the customer buys the cheaper one. This creates pressure to reduce expenses including wages, which in turn drove down the standard of living.

The Littleton staff concluded that commoditization was the root of poverty, which meant it was also the root of many social and political issues in the country.

Stage 2 Companies are driving local economies. The data showed that local, Stage 2 growth companies were responsible for a significant proportion of growth (15% of the total number of businesses, 40% of the new jobs). These were the companies that typically innovated, created good jobs, and sold to external markets. They were essential to the economic health of a community.

The sales window has the highest probability of making a sale. Economic Gardening recognized that the purchase decision process has four steps (motivation, investigation, evaluation, and selection), and this process creates a sales window. The probability of making a sale while the sales window is open is high. The probability of making a sale before or after the sales window is open is low.

LIKE MINDED THINKERS

Front Range Economic Gardening Group – Stream 1

California – Stream 2

Discussions between representatives of the California Trade and Commerce Agency, the California State University campuses, the city of San Bernardino, and a small group of local government economic development officials led to demonstration projects in three cities: Lake Elsinore, San Bernardino, and Chico. Kay Reynold, then president of the California Association for Local Economic Development (CALED) professional organization became a vocal proponent and the very first Economic Gardening conference was hosted by Dan Ripke at the Center for Economic Development in Chico, California in 1999.

By 2000, Economic Gardening became a hot topic in economic development circles, but it took the entry of three heavy-weight institutions from the middle of the country to embed entrepreneurship into the national discussion and policy making.

• The Kauffman Foundation added weight, money, and national reputation to the movement.

• The Center for Rural Entrepreneurship moved the idea into rural areas.

• The Kansas City Federal Reserve brought it to under-resourced communities and expanded it to inclusive economic development.

Kauffman Foundation – Stream 3

By 2000, Economic Gardening became a hot topic in economic development circles, but it took the entry of three heavy-weight institutions from the middle of the country to embed entrepreneurship into the national discussion and policy making.

The National Commission on Entrepreneurship

The commission began publishing reports on entrepreneurship like “Gazelles: High Growth Businesses and their Contribution to the U.S. Economy.” The term gazelles was coined by Phil Burgess and David Birch and first used in Littleton in 1987.

In 2003, the foundation established the Kauffman Center for Entrepreneurial Leadership to provide education and resources for entrepreneurs. Soon, new programs like FastTrac and One Million Cups let Kaufman quickly establish a leadership position in the space.

Kauffman reports like “Entrepreneurs in the New Economy” reinforced Littleton’s basic premise and helped legitimize the subject in academic and government policy circles. Academia exploded with research and publications about the concept.

In 2017, the foundation pushed the envelope even further when it initiated the concept of “entrepreneurial ecosystem building” with a formal playbook that outlined the role and importance of community infrastructure needed to spur entrepreneurial activity.

Center for Rural Entrepreneurship – Stream 4

Macke recalled, “Our vision at the Center was to focus on learning from innovative rural entrepreneurial communities, capture the learning and then build out our e2 Development Framework and Process (to help communities with entrepreneur-focused economic development strategies) which we employed in new entrepreneurial community initiatives across North America.”

The center also left a wide wake of joint projects across the heartland including the Nebraska Community Foundation, the Heartland Center for Leadership Development, Kansas Small Business Development Center, Georgia Tech’s Economic Development Institute, the Rural Learning Center in South Dakota, the North Carolina Rural Center, and the Corporation for Enterprise Development.

Florida – Stream 5

In the summer of 2009, the team of Steve Quello, Tom O’Neal (University of Central Florida – UCF), Mark Lange (Lowe Foundation), and I set up the Florida Economic Gardening Institute at UCF with GrowFL as the official brand name.

Quello reflected on his early days: “Our contribution to the “revolution” was applying the principles and best practices of the Littleton program at scale. We demonstrated how to apply the Littleton model across an entire state, including multiple markets and hundreds of business owners, all at a documented return on investment of 9:1.”

Sirolli Institute – Stream 6

Sirolli started by training “enterprise facilitators” to listen carefully to the ideas of budding entrepreneurs and then provide customized resources and support to flesh out the essentials of a successful business. Sirolli worked all across America with projects in communities like Fresno, CA; New Orleans, LA; Spokane, WA; East Palo Alto, CA; Birmingham, AL; Detroit, MI; Burlington, VT; and Springfield, IL.

Kansas City Federal Reserve – Stream 7

The final branch of the entrepreneurial revolution story comes from the Kansas City Federal Reserve. In 2011, a young urban planner named Dell Gines joined the organization and quickly established a leadership position in the inclusive economic development discussion. Gines wrote and published numerous research papers and articles on entrepreneurship in under- resourced communities.

When asked why he joined the “revolution,” Gines commented, “Coming from my background in one of the poorest African American communities in the nation, I recognized that there had to be better economic development approaches than what was currently being used. Based upon my background in business banking, and small business support, I knew entrepreneurship had to become an economic development priority.”

Gines became a national proponent of local entrepreneurship as a method for improving the fortunes of communities of color and rural communities that were left behind. He advised bank presidents and se- nior management on entrepreneurial strategies to promote inclusive economic growth. Gines is now Vice President of Strategic Partnerships, Advisory

Gines became a national proponent of local entrepreneurship as a method for improving the fortunes of communities of color and rural communities that were left behind. He advised bank presidents and senior management on entrepreneurial strategies to promote inclusive economic growth. Gines is now Vice President of Strategic Partnerships, Advisory Services and Thought Leadership at the International Economic Development Council. Those who were there at the creation of the entrepreneurial revolution are starting to retire and passing from the scene. Many new professionals aren’t aware of the early struggles to get entrepreneurial activity into the economic development discussion. What makes the story unusual is that the grassroots efforts in the late 1980s and 1990s weren’t driven by federal government policy, elite universities, or topdown state programs.

Services and Thought Leadership at the International Economic Development Council.

THE TORCH PASSES

A Look into the Future

Communities which have not had success in recruiting companies, have found success in “growing their own.” The potential costs and the risks are low and the payoff high. Locally grown companies have another benefit: they tend to be loyal to their communities. They also participate in public life – serving on boards and commissions, running for office, donating to charities, and sponsoring the local school activities.

Entrepreneurial activity has always been the foundation of the American economy. It is now firmly embedded in policy and practice, and the torch is passed to the next generation.